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failed blue ocean strategy examples

Instead, companies should pursue new spaces, “blue oceans”, untapped markets with no competitors, enjoying new levels of growth and improved profitability. There are great success stories that show the power of blue ocean strategies. Adopting a Blue Ocean Strategy, pivoting to a brand-new markets without competitors, is, for many, the holy grail of corporate strategy. Pursuing a blue ocean is  in essence what I suggested in a post would have been a good strategy for Radio Shack: focusing on a smaller, but relatively uncontested market of DIY electronics. There is no magic formula or silver bullet. Pursuing a Blue Ocean strategy can be a great choice for many companies, but it is not without risks or challenges. 2. This was a Blue Ocean Strategy example. Copyright (C) 2014 Gerardo A. Dada. A better example is Cirque du Soleil, as they shifted away from the traditional circus by creating a completely new category of entertainment that is more theatrical and artistic, resulting in a multi-billion dollar success. Being too new, too different. 5 Steps to Turn Big Data Technology into Business Value. Let’s start with the definition of blue ocean and then let’s explore the challenges and risks in pursuing such a strategy. Some blue oceans are free of predators, but also free of fish. Finding the right blue ocean. Investors, executives and employees should be realistic about the time required to be successful in a new market. Consumers don’t like too much change. Yes, but which one? Keurig did a better job in executing the same idea, with an inferior product. It would be a mistake not to understand the risks, and to also study all the companies that failed in pursuit of new oceans. Apple observed the flood of illegal music file sharing that began in the late 1990s, enabled by file sharing programs such as Napster, Kazaa, and LimeWire. Strategic clarity and corporate mindset. Henry Ford created the Model T, the first standardized, mass-produced automobile. Cirque du Soleil reinvented the circus industry by pursuing both low cost and differentiation. 3. The DVORAK keyboard, designed in 1936, is clearly superior for this age, yet we don’t want to change. Kodak invented the first digital camera. Customers might not understand what you are trying to sell. The technology might not be fully developed. Corporate culture, often has to shift. Arriving too early. Strategy is a choice. 5. Standardization reduced costs by employing unskilled laborers instead of car artisans. We don’t like change. Choosing the right blue ocean strategy must be the result of a deliberate and detailed process, backed by the right research. This requires clarity about the new destination, the trade-offs it requires, the challenges of getting there. Tassimo did not execute, and it is all but dead now. Strategy execution. Companies pursue Blue Ocean Strategies to make competition irrelevant. I am typing this post on a QWERTY keyboard layout, designed in the early mechanical typewriter era (1873) to slow typing down. What is Product Marketing and why is it so Important? 1. When P&G introduced their improved concentrated laundry detergents, it failed because consumers could not conceive how a few drops could clean as well as a cap-full of Tide. It requires the right research, patience and focus. The number of companies that failed in the attempt is probably larger, their skeletons lie now at the bottom of the sea. Milestones that show meaningful progress are going to be important. It’s not enough to decide you want to go in a different direction, you need to shift the direction of your company. Who does not want to make competitors irrelevant and to in grow a vast, blue, new market uncontested? Defensibility. Corporate mindset is a challenge too. Blue Ocean Strategy is a theory explained in a 2005 book by W. Chan Kim and Renée Mauborgne, professors at INSEAD. 6. This list would not be complete without mentioning Cirque de Soleil, arguably one of the most famous examples of blue ocean strategy in action. it’s not that easy to come up with new ideas and identify large, untapped markets. Formed in Canada in the early 1980s, the company has since gone on to entertain 155 million people in over 300 cities. All opinions are my own. Results most likely won’t be immediate, so it requires patience. Your strategy to defend your market (and profits) can consist of speed of execution, brand power, or technology – among others. How? The Amiga computer was a decade ahead of PCs and Macs, it was a technological marvel, and it died because the World was not ready for it. Everyone in the organization needs to understand the new set of customers, the new rules implicit in the new strategy. The fundamental premise is that most companies fight competitors head-to-head in the same space, chasing the same customers with very similar products, creating a  bloody-red ocean in their feeding frenzy. New markets where profits can be found don’t remain the domain of a single player for long. Cirque’s pristine blue ocean is being pursued by new competitors, like Wynn’s LaReve. You need to be smart about who is your customer, what problem you are solving, how to educate them on new ideas, new products, new solutions – and how to explain the value of the new way of doing business. The Apple Newton and the first Microsoft Tablet PCs, were the right ideas, just a couple years too early. And they are not always right. Failing to get employees on board with the new direction can prevent you from getting to the blue ocean. When Rackspace pivoted to the cloud, it had to evolve the thinking prevalent in every one of its thousands of employees from hosting servers to providing a platform. However, it is a risky shift. Entering a market too early is a clear risk. It’s also not easy. There are thousands of stories of companies that could not find profitable new markets. Blue Ocean Strategy Examples: iTunes. This post defines Blue Ocean Strategy and explores a few examples while pointing out the five main risks of pivoting in the search for a rich blue sea without competitors. Entering a new market is difficult. It’s better to start building defenses as soon as you arrive in your new market. In 1908, 500 American automakers existed making custom automobiles. First mover advantage is a myth. With the launch of iTunes, Apple unlocked a blue ocean of new market space in digital music that it has now dominated for more than a decade. Yes, it is possible to be successful pursuing a Blue Ocean strategy. Many companies have done it. 4. Buyer Psychology and Customer Value: Why People Buy Starbucks coffee? Limiting car options reduced the number of unique parts needed. By 2003 more than two billion illegal music files were being traded … Many companies when pivoting to a new strategy, don’t do it gradually, they bet the farm. Tassimo had a better product than Keurig when both entered the new single-pod coffee market. You need to build defensibility into your strategy. New markets introduce new terminology, solve new problems, or solve existing problems in new ways. It’s tempting to assume this is the right strategy for every company. It it smooth sailing or is it too good to be true? Trust and patience. Marketing Strategy and Leadership Posts by Gerardo A. Dada, Home » General Posts » The Risks of Following a Blue Ocean Strategy. By definition, these markets are new, uncontested, no one is there. The iPhone was a couple years late to the smartphone party. Going to a different ocean, a blue ocean, requires a lot of trust, preparation and faith. It is also important to look at early indicators to confirm you are not fishing in a dead sea. Many companies come up with great ideas but the market is not ready. 6. Otherwise, every company would pursue a blue ocean. Blue ocean sounds great: go to a new market. The moment you find a new ocean, other sharks from your former red ocean and other adjacent oceans will be attracted to your new market.

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